The major indexes trimmed losses late in the day after CNBC reported that the White House is preparing to expand rules favoring American products in government projects.

Tech, the largest sector by weight in the S&P 500, fell more than 1 percent as a disappointing quarterly report from Chinese tech giant Tencent weighed. Tencent's U.S.-listed shares dropped 6.7 percent after reporting its slowest revenue growth rate since 2015. Shares of U.S. tech giants Facebook, Apple and Alphabet all dropped. Other Chinese tech stocks like Alibaba and JD.com also fell.

Meanwhile, Macy's shares dropped nearly 16 percent as the company's quarterly report showed it is struggling to grow sales. The company posted better-than-expected quarterly earnings and revenue, but its sales still fell on a year-over year basis.

Equities also fell amid lingering worries about Turkey's financial situation, continued strength in the U.S. dollar, a sell-off in copper and broad weakness in emerging markets.

A Turkish regulator said Wednesday it was limiting banks' currency swap transactions. The move is likely aimed at curbing short selling against the lira, which has recently taken a beating.

The Turkish lira fell to a record low earlier this week as global investors fear Turkey's economic troubles could spell trouble for other economies around the world. Last month, Turkey's inflation rate hit 16 percent, well above the central bank's 5 percent target.

Pedro Martins, a strategist at J.P. Morgan, reiterated his underweight rating on Turkish equities, noting "we need to see comprehensive macro and policy response" to revisit the recommendation.

"J.P. Morgan's macro team believes that a policy response would need to consist of the following components: policy rate hikes between [5 percent and 10 percent], fiscal commitment to backstop and recapitalize banks and deal with problem loans, targeted fiscal support for the most distressed sectors – a general policy framework which acknowledges the need for deleveraging and recognizes a recession is a natural side-product of this process," said Martins in a note Tuesday.

European stocks fell broadly as the German Dax pulled back 1.6 percent and the French CAC 40 fell 1.8 percent.

Bank shares fell broadly as Bank of America and Citigroup both dropped more than 1 percent. J.P. Morgan Chase also fell 0.8 percent.

"It looks like we took a breather yesterday but it seems like there is a bit of a contagion effect," said Jack Ablin, founding partner of Cresset Wealth. "Commodities are down, currencies are down" and emerging markets are down. "I don't think I can sit here and tell you this is going away."

The dollar traded near its highest level in more than a year, pushing the euro, Chinese yuan and other major currencies lower.

The dollar's rise also pushed down industrial metals like copper, which hit its lowest level in more than a year earlier on Wednesday. Copper is often seen as a leading indicator of future economic trends since it is used in a number of different sectors.

Emerging-market stocks also took a beating. The iShares MSCI Emerging Markets ETF (EEM) dropped more than 2.9 percent and entered bear-market territory, down more than 20 percent from its 52-week high. The iShares MSCI China ETF (MCHI) dropped 3.7 percent as the Chinese yuan hit its lowest level against the dollar since January 2017.

"I don't think this is so much people still worrying about Turkey, but rather people realizing this could be the start of a broader EM decline," said Alexander Altmann, head of U.S. equity trading strategy at Citi.

The Cboe Volatility Index (VIX), widely considered the best fear gauge in the market, rose more than 20 percent to 16.02. Meanwhile, the benchmark 10-year Treasury note yield fell to 2.85 percent on Wednesday.